COVID-19 (a/k/a) Corona Virus; the Project Plague: Legal - - PowerPoint PPT Presentation

COVID-19 (a/k/a) Corona Virus; the Project Plague: Legal Checklists for Risks, Problems and Concerns

Construction Law Foundation of Texas

Presented by Bill Sommers, Bill Andrews and Tony Stergio

Black Swan Event

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Part I: Human Dimension

• Shelter in place is the new

quarantine

• Social distance
• Lack of personal contact
• Uncertainty
• Fear

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Facts and Figures

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• Worldwide confirmed cases

– March 15, 2020: 181.6K – March 23, 2020: 418K – March 30, 2020: 857.5K – April 6, 2020: 1.3M

• Worldwide deaths

– March 15, 2020: 6K – March 23, 2020: 15K – March 30, 2020: 38K – April 6, 2020: 75.5K

• United States confirmed cases

– March 15, 2020: 3K – March 23, 2020: 35K – March 30, 2020: 164K – April 6, 2020: 369K

• United States deaths

– March 15, 2020: 68 – March 23, 2020: 1K – March 30, 2020: 3K – April 6, 2020: 10.5K

Staggering Socioeconomic Impact

• Business closures
• Unemployment
• Court Restrictions
• Essential

Occupations

• Diminished health

care response

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• Alcohol Sales

Skyrocket!

“Pandemic”

• From Greek (nav pan all+onjuc demos) which

is a widespread occurrence of an infectious disease in a community at a particular time that spreads through human populations across a large region or even worldwide.

• All of the continents have been affected and
• ver 83 countries.

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Part II: Unprecedented Responses

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Shelter in Place Orders

• Bexar, Dallas, Nueces and Harris Counties have

deemed the following types of construction as “Essential Services”

Ø Public Works Ø Residential Ø Commercial Ø Schools Ø Airports

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Shelter in Place Orders

Bexar County issued April 6

Ø Effective through April 30, 2020

Dallas County amended April 3

Ø Effective through April 30, 2020 Ø Continuance of Designation of Local Disaster remains effective through May 20, 2020

Harris County amended March 24

Ø Effective though April 30, 2020

Nueces County issued April 2

Ø Effective through April 30, 2020 Ø City of Port Aransas Order prohibiting fishing and camping issued April 2. Deems fishing an “activity” rather than “service”.

• Effective through April 9, 2020

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Stay Home, Work Safe

The Coronavirus Aid, Relief and Economic Security Act

“The CARES Act”

• Signed into law on March 27, 2020 by President

Trump

• Largest stimulus and financial aid legislation ever

enacted

• Created the Paycheck Protection Program
• Will be administered by the United States Small

Business Administration (SBA) under 7(a) loan program

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The CARES Act

• SBA issued additional guidance to lenders last

week.

• Small Businesses interested in participating

should contact qualified SBA lenders immediately to being applications

• Commence on April 3, 2020 and remain open

until the earlier of (i) June 30, 2020; or (ii) the $349 billion appropriated to the program is exhausted

• Link to the CARES Act

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Paycheck Protection Program (PPP)

• Eligibility

ü Small businesses in operation as of February 15, 2020 ü Fewer than 500 full or part-time employees ü Sole proprietors ü Independent contractors ü Self-employed so long as income is less than $100,000 in one year ü Nonprofit organizations ü Veteran organizations ü Tribal concerns ü Affiliation rules waived for franchises with fewer than 500 employees ü All existing SBA 7(a) lenders are automatically approved to make PPP loans

• n a delegated authority basis
• Use of Proceeds

ü Payroll costs ü Mortgage interest (but not principal) ü Costs related to group health care benefits for paid sick medical and family leave and related insurance premiums ü Rent payments ü Utilities ü Interest on Economic Injury Disaster Loans made between January 31, 2020 and April 3, 2020 ü If borrower’s Economic Injury Disaster Loan was used to pay borrower’s payroll costs, the borrower must use proceeds from its PPP loan to pay off portion of its Economic Injury Disaster Loan used to pay payroll costs ü Interest on debt obligations incurred between February 15, 2020 and June 30, 2020

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Paycheck Protection Program (PPP)

Amount & Fees

• Equal to the sum of (a)

2.5 the average total monthly payments for “Payroll Costs”; plus (b) the outstanding amount of any SBA Economic Injury Disaster Loans

• Maximum amount is

$10,000,000.00

• All fees are waived

during period between February 15, 2020 through June 30, 2020

Terms

• Interest rates cannot

exceed 4%

• Lenders must provide

for complete payment deferment for six months, but not more

• No personal

guarantees, no collateral required, no prepayment penalty

• reduced payroll at start
• f covered period
• Borrowers must

document compliance with rules

Forgiveness

• Amount of loan spent during

eight-week period after

• rigination date is eligible for full

forgiveness if no staff reduction before June 30, 2020

• Forgiveness amount is

proportionally reduced by a reduction in employees and by the amount of reduced pay of any employee beyond a 25% reduction

• Borrowers that rehire released

employees and increase wages that have been reduced will not be penalized for having reduced payroll so long as employees are rehired

Interim Final Rule

• Released April 2, 2020
• Prospective applicants are ineligible to participate in

PPP if they have ever obtained a direct or guaranteed loan from the SBA that is currently in default or was in default within the past seven years

• Independent contractors do not count towards

calculation of Payroll Cost

• Interest rates on PPP loans are 1.00%

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Interim Final Rule Continued

• Loan term is two years
• Allows for electronic signatures on loan

documents

• PPP is “First come, first served”
• Amount of loan forgiveness will not be

considered income to borrowers and will not be subject to federal income tax

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Interim Final Rule Continued

• Applicants must submit the following forms:

(a) SBA Form 2483 – PPP Application Form; (b) Payroll documentation; (c) SBA Form 2484 – PPP Lender’s Application for 7(a) Loan Guaranty; (d) possibly other documents

• Borrower Certifications: An authorized representative of the

applicant must certify certain terms related to eligibility and possible forgiveness of the PPP loan proceeds. Lenders may rely on these to assess eligibility to participate in PPP

• PPP loans may be sold in the secondary market once funds

have been fully disbursed. PPP loans may be sold at a premium or at a discount to par.

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Underwriting Requirements for Lenders

• Certify receipt of borrower certifications;
• Certify receipt of information demonstrating that borrower

had employees that were paid salaries and paid payroll taxes “on or around” February 15, 2020;

• Confirm dollar amount of average monthly payroll costs for

preceding 12 months by reviewing payroll documents provided by borrower;

• Follow current bank Secrecy Act and Anti-Money Laundering

requirements applicable to insured depository institutions

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Lender and Agent Fees

• Lenders may charge processing fees on PPP loans for loans
• up to $350,000 – 5%;
• between $350,000 and $2,000,000 – 3%; and
• between $2,000,000 and $10,000,000 – 1%
• Agents (e.g., attorneys, accountants, loan packagers, etc.) may

charge fees on PPP loans, which will be paid by Lenders out of Lender’s fees for loans:

• up to 350,000 – 1%
• between $350,000 and $2,000,000 -0.5%
• between $2,000,000 and $10,000,000 – 0.25%

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The Texas Lawyer’s Creed

A Mandate for Professionalism

• “I will notify opposing counsel, and, if appropriate, the Court or other persons, as

soon as practicable, when hearings, depositions, meetings, conferences or closings are cancelled.” TX R LWYR’S CREED III. 5; Tex. R. Civ. P. 21(a)(a); Tex. R. Civ. P. 21(b).

• “A lawyer owes to opposing counsel, in the conduct of legal transactions and the

pursuant of litigation, courtesy, candor, cooperation, and scrupulous observance of all agreements and mutual understandings. A lawyer shall not engage in unprofessional conduct in retaliation against other unprofessional conduct.” TX R LWYR’S CREED III.

• “The Supreme Court of Texas the Court of Criminal Appeals are committed to

eliminating a practice in our State by a minority of lawyers of abusive tactics which have surfaced in many parts of our country... The abusive tactics range from lack of civility to outright hostility and obstructionism.” TX R LWYR’S CREED.

• “Compliance with the rules depends primarily upon understanding and voluntary

compliance, secondarily upon re-enforcement by peer pressure and public opinion, and finally when necessary by enforcement by the courts through their inherent powers and rules already in existence.” TX R LWYR’S CREED

• Link to Texas Lawyer's Creed

Electronic Forms, Filings and Hearings

• Link: Supreme Court Order Requiring Adoption of Electronic Forms
• Link: Texas Judicial Branch Allowing Virtual Hearings
• Link: Emergency Order regarding extensions of deadlines
• On April 1, 2020, the Supreme Court of Texas issued its Eighth

Emergency Order dealing all service and statute-of-limitations deadlines in civil cases from March 13, 2020 until June 1, 2020. The

• rder does NOT affect deadlines for filing appeals or other appellate
• procedures. Requests for appellate deadlines should be “generously

granted”

• The Supreme Court of Texas has adopted electronic forms and filings

and has stated on their website that virtual hearings are permissible. Instructions on how to perform virtual hearings can be found using the link below.

CHECKLIST

ü Familiarize yourself with PPP and how it works. ü Work with the client, the clients CPA/CFO, and the clients banker to comply with all requirements. ü Advise, lead and assist your client during this time of massive confusion among lending institutions as to underwriting and funding requirements.

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Part III: Labor and Employment Challenges, Problems and Issues

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{COMPANY OR GOV ENTITY LETTERHEAD} {DATE} RE: CRITICAL INFRASTRUCTURE AUTHORIZATION LETTER To Whom It May Concern: {name of individual} is an employee of {name of company or governmental entity}. {name of company or governmental entity} has been deemed an essential service by the State of Texas and the City of {City wherein bearer of letter lives}. As such, and pursuant to the Department

• f Homeland Security Cyber Security Infrastructure Security Agency (“CISA”), and the guidelines

provided for identifying critical infrastructure during the COVID-19 pandemic, the bearer of this letter is allowed to travel, work, operate, maintain, and respond to {name of company or governmental entity} critical infrastructure. This authorization is narrow in scope and only for purposes of the bearer performing his/her duties as it pertains to their job function. This letter will serve as valid authorization for the employee/contract employee to respond and tend to {name of company or gov entity} critical infrastructure needs. If you have any questions, please contact me directly. Sincerely, _/signature/_________________________ (name of manager/supervisor in charge of safety and security) (title) (office number) (cell number) (address) (email)

References:https://www.cisa.gov/sites/default/files/publications/CISA_Guidance_on_the_Essential_Critical_Infrastructure_Workforce_Version_2.0_Updated.pdf

Attorneys and Staff Under Stay-at- Home Orders

• On April 2, 2020 the Office of Court

Administration issued a travel authorization for lawyers and their staff confirming that lawyers are in fact exempt as they are “workers supporting the operations of the judicial system.”

• Attorneys and Staff Under Stay-at-Home Orders

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Different Types of Emergency Leave

Leave Provided for:

• Government ordered quarantine;
• Quarantine/Self isolation on order of healthcare provider;
• Care for quarantined individual or substantially similar care;
• Treatment or diagnosis of Covid-19;
• Care for child due to school closure or unavailable child

care.

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Specific Leave Issues

• Leave can be used intermittently if employer

agrees.

• Different types of leave can interact.
• No leave if employee is furloughed before

April 1.

• Leave cuts off if employee is terminated or

furloughed after April 1 due to lack of work/closure.

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Emergency Paid Sick Leave

10 days of paid leave total between reasons below

Emergency FMLA

10 days of unpaid leave, then 10 weeks of paid leave Parent caring for his or her child because of a school closure or child care unavailability due to COVID-19 Paid at 2/3 the employee’s regular rate. Capped at $200 per day and $2,000 in the aggregate. Likewise paid at 2/3 the employee’s regular rate. Capped at $200 per day and $10,000 in the aggregate. Care for quarantined individual or substantially similar care Paid at 2/3 the employee’s regular rate. Capped at $200 per day and $2,000 in the aggregate. Not covered. Employee quarantined by government order or on advice of health care provider, or out for diagnosis or treatment due to COVID-19 Paid at full regular rate. Capped at $511 per day and $5,110 in aggregate. Not covered.

Only applies if employee is unable to work or telework. Effective April 2, 2020 through December 31, 2020

Expansion of Unemployment Benefits

• Available for employees who lose work due to Covid-

19 related closures or furloughs.

• Not available due to mandatory salary reductions but

an employee can get unemployment if they quit as a result of a salary reduction of more than 20%.

• Now no waiting periods for unemployment.

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COVID Positive or Presumptive Positive Employee?

• Keep employee away from work until he/she gets

healthcare provider release.

• See who employee contacted in three (3) days prior

to becoming symptomatic.

• Notify those employees of potential positive

(without identifying employee).

• Pre-consent
• Post-consent

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Safety Issues

• Rapidly changing daily
• Look for OSHA guidance daily
• Look for upstream directives daily
• RTFC – What does your contract require you

to do on Safety?

• May create inefficiencies, delay, suspensions,

etc.

– Possible claims

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OSHA General Duty Clause

• Employers must keep employees safe from known

serious hazards.

• Each employer shall furnish to each of his employees

employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his

• employees. 29 U.S.C. § 654, 5(a)1.

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OSHA Recordable / Reportable of Covid-19

• If it can be directly attributable to work.
• There is also a possibility that a confirmed Covid-19 case

among your employees could be an OSHA recordable.

• A confirmed employee COVID infection would only by

recordable if it is work related. A case is presumed to be work-related if and only if an exposure in the work environment is a discernable cause of the illness.

– difficult to establish given the present situation.

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Worker’s Compensation

• Whether Covid-19 is compensable is up to the

carrier.

• Case by Case Determination

– Occurred during the scope of – compensable! – If not – ordinary life disease.

• Work related Covid-19 increasingly more difficult to

establish as virus spreads (outside of healthcare employment).

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Legal Checklist

ü Determine who is entitled to paid leave. ü Determine who is entitled to unemployment. ü Determine what employees should be kept from workplace. ü Determine what employees should be told of positive or presumptive positive employee. ü What are OSHA responsibilities? ü Are certain Covid-19 issues compensable?

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Part IV: LIABIITY, INSURANCE AND RISK MANAGEMENT PROBLEMS - RISKS AND CONCERNS

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COVID-19: A minefield of potential liability and cost exposures

• Employee claims and third-party claims
• The big question: Do the standard

construction insurance products provide coverage (defense and/or indemnity)?

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Frequently asked question: My project, my work is shut down due to

• COVID. Am I covered?
• Business Income Insurance (f/k/a Business

Interruption Insurance)

– Not carried by many contractors

• Any coverages under the Standard ISO form?

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Business Income Insurance

Problematic coverage due to:

– Virus exclusion (mandatory in Texas) – Shutdown of Project due to fear of virus is not considered property damage – No property damage to property described in Declarations Page (typically, the home office not specific projects) – 72 hour waiting period

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Business Income Insurance

• But, cardinal rule: always give timely and

proper notice to the insurer.

• Never permit a broker to tell you there is no

coverage.

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Builders’ Risk Insurance

• Manuscript forms
• Virus Exclusion
• Delay in completion and soft costs coverage
• Has to be property damage or caused by such

damage

• Insurers may deny coverage arguing no

property damages (fear of virus is not property damage)

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CGL/Professional Liability Policies

• Coverage/indemnity are open issues.
• Depends on particular facts.
• More of an open game.

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A realistic worry: the Stigmatized Building lawsuit/claim

(People “shun” the building or facility due to the stigma of the virus)

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CGL/Professional Liability Policies

What about this scenario?

• Mechanical Engineer designs HVAC system which

permits the virus to spread throughout the facility.

• HVAC contractor prepares shop drawings

implementing design and installs the HVAC system

• Virus spreads with widespread personal injuries

(sick employees of various trades/subcontractors).

• What about buildings partially occupied during

construction (e.g. nursing homes/hospitals).

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CGL/Professional Liability Policies

• Facility not occupied scenario/still under

construction when virus spreads and seemingly causes widespread illness.

• Owner sues general contractor and design

processionals claiming building stigmatized and can’t rent or lease or sell

• Coverage in Legionaire disease cases

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CGL/Professional Liability Policies

• CGL Policy: possible coverage
• Large deductible
• Professional liability exclusion
• Is value engineering professional services?
• What about shop drawings?

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Professional Liability Policies

• Probably no virus exclusion
• Standard of Care issue looms large
• Wide open, fertile ground for lawsuits

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Pollution Liability Policy

Questionable as to coverage

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Automobile policies

• Fact Scenario:

– Driver unknowingly has the virus – Others in vehicle get sick (accidently!) – Injuries arise out of use of automobile

• Possible coverage
• And, if in course and scope, contractor’s auto

policy implicated

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Workers’ Compensation

• Injury or illness incurred by an employee in

course and scope of employment

• Coverage if employee required to be at place
• f work and exposed to virus
• Key variable element is exposure to virus at

work place

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Risk Management

• Risk management practices and decisions directly

impact contractual and legal liability and responsibility

• Implicate insurance coverages
• One big question transcends all sectors and groups in

construction: What are the legal duties owed by participants in the construction process?

What is the standard of care applicable to all of these participants?

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Critically important for each of your clients:

• Get with their brokers and company Risk

Managers

• Perform an immediate inventory and audit of

all insurance coverages (project specific and company wide)

• This includes AI

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Don’t wait for a claim or lawsuit or demand for arbitration!

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Insurance and Risk Management Checklist

ü Know all your coverages? ü Perform an immediate audit with your broker/risk manager to identify each and every project and potentially applicable insurance (project specific and company wide) ü Identify those projects with claim potential ü No matter what you’re told about coverage, give frequent and meaningful notice of all incidents/occurrences

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Insurance and Risk Management Checklist

ü Don’t take a broker’s opinion on coverage ü Be prepared for the lawsuits ü Those in the construction industry face potentially significant exposure

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Part V: Agreements and the Law

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Introduction

• Force Majeure and Suspension
• Differing Site Conditions
• Safety Concerns
• Contract Issues (RTFC)
• Notice (Notice, Notice, Notice)
• Q&A

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Force Majeure (TX)

• Impossibility vs. More Expensive
• Could not have been anticipated, foreseen, or

guarded against

• Impossibility – Common law defense
• Force Majeure – Contractual remedy (RTFC)
• No Texas cases on point on COVID-19

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Force Majeure (Generally)

• Clauses typically interpreted narrowly (RTFC)

– If not listed, likely not covered – May see a Court-created exception for COVID-19

• If not in the contract, you likely have no force

majeure remedy

• “Normal” items in FM clauses:

– Provisions often cover natural disasters like hurricanes, floods, earthquakes, and weather disturbances sometimes referred to as "acts of God." Other covered events may include war, terrorism or threats of terrorism, civil disorder, labor strikes or disruptions, fire, disease or medical epidemics or outbreaks, and curtailment of transportation facilities.

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Force Majeure Clauses

Four Considerations when Reviewing Force Majeure Clauses:

• 1. List of Events

– Specific instances in which force majeure can be invoked (i.e. – acts of God, pandemic, governmental authority)

• 2. Standard of Performance

– Was performance impossible, impracticable, or illegal? – Parties must ask:

• Prevented from complying?
• Hindered from complying?
• Performance not reasonably possible?

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Force Majeure Clauses Continued

• 3. Catchall Provisions

– Designed to cast a broad net

• “any other like cause” or “any similar cause”

– Equal Quality – other cause must be of equal quality to any stated specific events

• i.e. – if riot, fire, and strike are listed then governmental

authority cannot be considered of equal quality

– Foreseeability – for catchall to apply event must have been unforeseeable

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Force Majeure Clauses Continued

• 4. Notice Requirements

–When should notice be given? Timely! –Preservation of legal rights

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Force Majeure or Delay?

• What metrics will be used to evaluate delay?

Who bears any additional costs?

• If total failure of performance, how will

compensation work? What will be considered reasonable mitigation?

• Contract should specify!

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Force Majeure is declared. What next?

Well drafted contracts will dictate what happens in the event of a delay:

• Guaranteed extension of the schedule (but usually

not compensation)

• May have the right to replace the party or terminate

the contract after a certain time;

• Party receiving the declaration of Force Majeure may

have the right to take over performance;

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Force Majeure is declared. What next?

Well drafted contracts will dictate what happens in the event of a delay:

• Parties may negotiate alternative performance with

adjustments to the contract price for any differences in cost.

• In the event of a termination resulting from an

extended delay or failure from a Force Majeure Event, contract likely specifies damages.

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Force Majeure: In the Current COVID-19 Environment

• Declarations often are poorly drafted
• Bereft of thoughtful legal and risk

management analysis

• Case in point—this declaration by a major

industrial owner on a large CAPEX project:

We accept the delay in construction caused by this measure…(President Trump’s 15 day isolation period declaration)

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Force Majeure: In the Current COVID-19 Environment

• Force Majeure—limited relief/remedy
• Not every declaration of FM qualifies as a FM

Event which is determined by:

• The contract;
• The facts; and
• The law

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Force Majeure: In the Current COVID-19 Environment

No common law right to FM If FM needed for schedule relief:

• Restatement of Contracts Sec. 261;
• UCC 2-615
• Difficult to apply and navigate

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Force Majeure: In the Current COVID-19 Environment

• Sole and exclusive remedy typically time

extensions

• No relief for escalations, delay damages, etc.
• Analyze the FM declaration and determine

whether it complies with the contract

– And, whether project conditions qualify

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Force Majeure: In the Current COVID-19 Environment

• Poorly drafted FM declaration or arguable

pretextual declaration to avoid or delay payment:

– Gives rise to claim suspension (actual or constructive) – And seek equitable adjustment in addition to time – Along with possible right to terminate

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Force Majeure: In the Current COVID-19 Environment

• AIA Section 8.3.1 A201 (does not use the term

FM)

• AIA Sec. 10.4 A201 (emergency)
• Consensus Docs 200 Sec. 6.3.1 (j) (refers to

epidemics, not pandemics)

• FAR 52.249-14 (excusable delays include

epidemics and quarantine.

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Force Majeure: In the Current COVID-19 Environment

KEY POINT:

• Always at issue and key question:

reasonableness of declaration as to scope, time and extent

• And overriding duty to mitigate
• Party facing such a declaration should never
• verlook other contractual remedies in the

face of a questionable declaration as declare and/or applied

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Force Majeure: In the Current COVID-19 Environment

Notices should include content and information under contract provisions addressing Owner caused delays and suspensions and differing site conditions

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Impossibility of Performance

• Occurrences Rendering Performance Impossible
• 1. Death or incapacity of a necessary party
• 2. Destruction of the subject matter of the contract
• 3. Illegality due to governmental regulation
• Standards

– Objective – performance is excused using a reasonable person standard – Subjective – does not excuse performance as subjective beliefs are irrelevant

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Impossibility of Performance

Impossibility is NOT:

–Inadvisable –Commercially Impractical –More Expensive

• Generally cannot contract for an illegal

act (to work around Gov’t order)

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The UCC and Impossibility of Performance

Expands on the common law to include contracts for goods and the concept of impracticability . Differences Between the UCC and Common Law

• 1. Cost – primary factor under the UCC but it must

be excessive and unreasonable

• 2. Occurrences – expanded to include severe

shortage of supplies, shutdown of major supply shortages, and incapacity of key employee

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The UCC and Impossibility of Performance – Cont.

• 3. Foreseeability – the event must be unforeseeable

4. Partial Performance – if party can partially perform, then fulfillment to whatever extent possible is required

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Differing Site Conditions

• From the TxDOT 2014 Spec Book:

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Unknown Physical Conditions

• Applies when Contractor encounters

HAZARDOUS MATERIALS, e.g. – Asbestos – PCBs – Waste Products – Environmental contamination

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COVID-19, a Physical Condition?

• Per National Institutes of Health, Princeton and

University of California, Los Angeles:

– SARS-2, virus that causes COVID detectable on physical surfaces – Adheres to cardboard up to 24 hours – Adheres for 2-3 days on plastic – Adheres for 2-3 days on stainless steel – Remains viable in aerosols (particles that stay aloft in the air) for up to three hours

• The virus that causes COVID may be physically

present at your jobsite for days.

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Sources:

https://www.wired.com/story/how-long-does-the-coronavirus-last-on-surfaces/

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Sources Continued

https://www.medrxiv.org/content/10.1101/2020.03.09.20033217v1.full.pdf

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Why DSC?

• Gets you time and MONEY
• TxDOT spec book:
• Puts obligations on TxDOT to “investigate the

conditions”

• BUT MUST PROVIDE NOTICE!

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Other options

• Federal Acquisition Regulation 52.216-4 Economic

Price Adjustment – Labor and Material

– Must be affirmatively added by Contracting Officer – Notice within 60 days of escalation – Up to 10% aggregate increase in labor and material costs may be permitted – TxDOT does not have analog, but see Consensus Docs 200.1

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Don’t Overlook AIA Section 2.2 A201

• Requirement that Owner furnish reasonable

evidence it can pay for your clients work when a request is made in accordance with this provision.

• Right to stop work if owner fails to furnish

reasonable evidence.

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Contract Issues

• RTFC – Read the F****** Contract

–You MUST read the full contract (included amendments and CO’s) –You MUST read the final contract (the

• ne that is signed, not what you think

was signed)

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Contract Issues Continued

–Change Orders modify the Contract (read those now CAREFULLY) –Need a full and complete copy in the Project Files at all times –Be mindful of Contractual Notice provision(s)

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Notice (Notice, Notice, Notice…)

• Absolutely critical to give timely Notice

– No notice, claims may be lost

• Contract typically defines:

– What needs to be noticed – How the Notice needs to be sent (Email, CMRRR, letter) – Who it needs to be sent to (Owner, Prime, Sub, Engineer, etc.) – What it must contain (narrative, schedule, quantum, etc.) – When it must be sent

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Legal Checklist

ü Analyze force majeure provision together with others that may affect it - keeping in mind they can be used affirmatively and defensively ü Not every declaration of a force majeure event is valid or binding ü Any declaration of force majeure is subject to challenge and legal scrutiny – including scope & reasonableness. ü In advising clients facing force majeure declarations, make sure proper notice is given to declaring party that your client is reserving all rights, including tracking time and cost impacts which may be basis for equitable adjustment and all records are properly kept

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Legal Checklist - Continued

ü Remember, a defective force majeure declaration likely constitutes a breach of contract, entitling contractor to time and cost relief under delay, suspension, and potentially change order provisions. ü Do not overlook potential claim for differing site conditions. ü FAR’s have potential remedies for covid-19 stalled projects.

• Understand deadlines based upon CO’s “decision”.

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Wrap Up

• Rapidly changing Reality
• Daily reports from News Agencies on hot spots,

confirmed cases and death counts

• Uncertainty and sharing information
• Cares registration
• “that I will honestly demean myself in the practice of

law; …, that I will conduct myself with integrity and civility in dealing and communicating with the court and all parties”.

• Have faith

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Construction Law Foundation of Texas

A Special Thanks!

Charles Comiskey RiskTech, Inc. and Brady Chapmen Holland & Associates Charles.Comisky@bch-insurance.com Brian Carrol Sanderford & Carrol, P.C. Brian@txconstructionlaw.com Thomas Lillibridge Langley & Banack, Incorporated TLillibridge@langelybanack.com Bruce Toppin Langley & Banack, Incorporated BToppin@langelybanack.com

Construction Law Foundation of Texas

Steve Nelson Markel Surety SNelson@Suretec.com Tony Stergio Andrews Myers, P.C. TStergio@Andrewsmyers.com Chris Scheurich Andrews Myers, P.C. CScheurich@Andrewsmyers.com Champe Fitzhugh Andrews Myers, P.C. CFitzhugh@Andrewsmyers.com Michael Lichtmacher Langley & Banack, Incorporated MLichtmacher@langelybanack.com

Questions?

Bill Sommers Langley & Banack, Incorporated WSommers@Langleybanack.com Bill Andrews Andrews Myers, P.C. WAndrews@andrewsmyers.com Tony Stergio Andrews Myers, P.C. TStergio@andrewsmyers.com

Construction Law Foundation of Texas